While having a dual-income household might seem ideal, and for many, it often is, there are certain reasons why people may need, or choose to, adapt to living off of one income.
Having a dual income is great as two people are bringing a pay-check home, but there are costs associated with this arrangement that many overlook.
Why Only One Income?
Having a second pay-check within the household allows you to enjoy more financial security.
For a family with young kids, however, the cost of child care may neutralize a large portion of one of the incomes.
You’ll also need to consider additional expenditures such as commuting costs (gas, vehicle maintenance, tolls, etc.).
In those types of situations, many families realize that the expenses of having two incomes becomes more hassle than its worth.
A lot of people are now realizing the need to stay at home with the kids and only live on one income.
Some choose this as their path to spend more time with their kids while they are growing up.
Of course, this may also not be by choice.
You could be living off one income because of a job loss. At that point the joint household income is forced into one.
Whatever the reasons for relying on one income, it’s important when this happens that you make the necessary adjustments.
Here are some of the things that can be done to help adjust to a one-income lifestyle.
1. Prepare Yourself
Unless your drop to one income isn’t planned, you should 100% make preparations ahead of time.
While you still have two incomes, plan your spending in a way you’re able to sustain your family adequately by using only one.
That way you can save the rest, and when you drop down to just one income, you’ll already be prepared.
Try to set some specific time milestones to help you get ready.
If you do decide to drop down to one income, set a date in the future where that will become reality.
In the meantime, work on adjusting your expenses, cutting down some bills, paying off any debts, and researching some less expensive activities to do with your family.
2. Create A Budget
Setting up a budget is always a good idea for any family, even outside of a one-income scenario.
It gives you a more clear view of where you are spending your money, where spending can be reduced, where cuts can be made, and help you have a better idea of what you can afford.
You can designate a notebook or a planner for the year’s budget, then set up different categories for your expenses.
For example, there are the “must’ pay” expenses (mortgage, utility bills, food, toiletries, debt payments, etc).
These are payments you are going to have to make and can’t cut down, at least not significantly.
Another should include the expenses you are more flexible on (entertainment, impulse purchases, going out to eat, daily coffee, etc).
Then prioritize the items in the “want” category by what is easiest and you are most willing to part with first.
You could do without most of that list, but most reasonable people would try to keep some semblance of “wants” and adjust their budgets appropriately.
But it’s not all about taking things away.
When creating your budget consider the gains you will make back as well.
If you are home, take away the child care expenses, take away the lunches you purchase at work, the coffee you purchase on the way, overpriced snacks you pick up from vending machines, gas, and other work-related expenses.
You might be surprised at the amount of money this saves you monthly.
3. Cut Down Your Expenses
When you are used to a particular lifestyle, changing it drastically can be very tough.
But when you sit down to evaluate your “must” payments, you may find that some of them are more of a “really want”, as opposed to a “must” type of an expense.
There are quite a few examples of these types of expenses.
One of them could be your cable bill, which most people would agree tends to be a grossly overpriced expense.
Are you watching all that you are paying for?
Plus, there are more targeted, less costly alternatives that will provide you what you actually need.
Add to that inexpensive streaming services, and you have potentially all that you need (and then some) for your entertainment.
This advice may seem contrary to cutting expenses, but you should pay off as much of your debt as possible, preferably starting with those credit cards that charge the highest interest.
You will be amazed at how much easier it is to have money for everything monthly, when the weight of debt and needless interest is not on your shoulders.
Call your electric and gas companies, to see if you can get a cheaper deal. Look around to see if you could get a better deal elsewhere, you might even be able to get cashback on your new deal.
4. Become Self-Sufficient
This is a toughie, but definitely attainable, though it does take work and can be intimidating.
The idea of becoming more self-sufficient, is to provide for yourself and not rely on others for the basic necessities.
This can include things like learning basic car maintenance to avoid relying on auto shops to change your oil or patch your tires.
It can also mean cutting down on shopping expenses by growing your own fruits and vegetables in a home garden.
If you have a baby, many of the baby foods can be little DIY projects which will allow you to simply puree the food with a food processor, rather than spending money buying it.
The more DIY skills you learn, the more money you will save.
This is especially significant if you can do some of your own repairs or house renovations.
If all you need to pay for is materials, the only other thing you need to have is time.
Some people pull off remodelling their kitchens or painting their homes completely on their own, saving a ton of money while doing so.
5. Make Sacrifices
To make ends meet on one income, you will need to forego certain things that you otherwise enjoy.
It could be hard, as sacrifices tend to be, but you might need to pass on dinner with friends or expensive nights out.
“Date nights” might have to be very occasional matters too, as hiring babysitters is not cheap and the dates tend to run your funds dry quickly.
6. Live Within Your Means
Living within your means generally goes back to keeping true to your budget.
This also means that you should stay away from increasing any debt by making a big purchase.
For example, unless you desperately need a new vehicle, this may be an area of expense you simply don’t need.
If that is not possible, look into a used one to save money.
If you are still considering a large expense, remember that the new debt you acquire won’t magically go away if you end up losing your remaining income stream.
How will you pay for it, if you have no income coming in at all?
If you genuinely need to purchase something, and it cannot wait, consider putting it on a credit card with the lowest interest.
That way if you are forced to make these payments, the damage from the interest will be minimal.
7. Find A Side Hustle
If you find that one income makes it a struggle for you to get by, and you could use a few more hundred dollars a month, why not try a side hustle ?
This could mean picking up a part-time job, even if it’s 10-14 hours a week, or even starting your very own money making side hustle from home.
It could be the difference-maker in supplementing your only income stream.
And having multiple income streams is always a good idea.
Turn to something that you are either good at or proficient in to help you out.
If you are good at a particular skill, see if you can help someone out with a need, and they may be happy to compensate you.
There are so many opportunities, some of them very simple, for you to make money especially at home.
Learn the multiple ways to earn extra money and pick the one that most suits you.
This can be anything from writing blog posts, touching up pictures, editing videos, creating slideshows, data entry, and hundreds of other “gigs.”
The great thing about these side hustles is that they can be done in your spare time, while your kids play, nap, or even after they go to sleep at night.
8. Set Up An Emergency Fund
Something you should do, ideally within at least 6 months of going down to one income stream is to create an emergency fund.
The key is to put this money away, and have enough for 6 – 10 months of sustainability if suddenly, none of the incomes become available.
A good practice is while still receiving incomes, compact all of your spending to be afforded by just one. Then take the entirety of your second income, and funnel it to your emergency fund.
Most importantly, use the funds for emergency purposes only.
This is not meant to be a side stash for when you want to splurge, but rather cash on hand to be able to use for things like a flooded basement, a dental/health emergency, or vehicular issues.
This way, you will not end up in a situation where you cannot pay for something that suddenly comes up or falls behind on your bills if the sole breadwinner is not able to bring in the typical income.
Wrapping it up..
I hope you enjoyed this comprehensive guide to save money and become self sufficient, whether you’re on one income or two!
There is no ‘one way’ to live on one income.
Do what works for you.
Remember, you’ll never know what life can throw at you, so it’s best to be prepared with your finances.
Make the best financial decisions now, so you can enjoy life a lot more for years to come.
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Good Luck and let me know how you get on?